Marketing Analytics: Case Studies
Name: ____________________
© Stephan Sorger 2013; www.stephansorger.com
Date: ________________________
MARKETING ANALYTICS: Case Study
Case No.
2
Chapters
2
Case Title
Market Sizing
Background
You have been promoted to Vice President of Marketing for ACME CPG, Inc. ACME sells consumer
packaged goods (CPG) to its customers in the United States. ACME competes against other CPG
companies, such as Procter & Gamble with brands such as Tide laundry detergent and Ivory soap, as well
as Unilever, with brands such as Sun laundry detergent and Dove soap.
Customers mostly know ACME CPG for its line of environmentally friendly all-purpose cleaners. ACME
prides itself on its non-toxic formula, safe for homeowners along with their children and pets. ACME has
diversified beyond all-purpose cleaners to include stainless steel cleaner, pet stain remover, deck & fence
cleaner, concrete and driveway cleaner, car wash, barbecue grill cleaner, carpet cleaner, floor cleaner, glass
cleaner, and all-purpose wipes.
ACME CPG is considering expanding its product line to include laundry detergent. The company faces stiff
competition but believes it can compete because of the stellar reputation of its environmentally-friendly brand.
ACME CPG management has asked you to estimate the size of the market to assess whether it is financially
worthwhile to enter the market. To conduct a thorough approach to the problem, you plan to estimate the
size using several different techniques, and then aggregate the results. Specifically, you will estimate the
size using multiple approaches:



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Available industry analyst reports
Government sources, such as Census data
Top-Down estimation methods
Bottom-Up estimation methods
Industry Analyst Reports
You learn that industry analyst firm SymphonyIRI Group (iriworldwide.com) has estimated the total size of
the US laundry detergent market:
Fact 1: Laundry detergent accounted for $7.2 billion of sales for the 52 weeks ended Nov. 4, 2012.
Source: Branna, Tom. “Where’s the Bounce?” Household and Personal Products Industry (HAPPI) website.
January 21, 2013.
http://www.happi.com/issues/2013-01/view_features/wheres-the-bounce/
Government Sources
You wonder how this industry analyst estimate compares with the Industry Statistics Sampler available
through the U.S. Census Bureau. You conduct an Internet search and find the North American Industry
Classification System (NAICS) code information you need:
Fact 2: United States Census Bureau data for 2007 Census:
NAICS 325611: Soap and other detergent manufacturing: $26.371 billion
NAICS 32561146 Household dry and liquid laundry detergents, heavy-duty: $6.734 billion
Source: U.S. Census Bureau, Industry Statistics Sampler, NAICS 325611 Soap and other detergent
manufacturing.
http://www.census.gov/econ/industry/products/p325611.htm
© Stephan Sorger, 2013; www.StephanSorger.com
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Marketing Analytics: Case Studies
Top-Down Estimation Methods
Having determined the industry analyst and government data, you proceed to the next step, which is to
estimate the size using top-down techniques. To perform the top-down technique, we will need to know the
total “universe” of detergent-using entities in the United States (i.e., households who do laundry), how many
loads of laundry they wash per year, and the average cost of detergent per load. Luckily, we are able to find
all of the facts we need:
Fact 3: Number of U.S. Households (designated as “HH” in U.S. Census Bureau data) in 2010 Census:
U.S. Households (HH) in 2010: 114.8 million
Source: U.S. Census Bureau, “Current Population Reports: Projections of the Number of Households and
Families in the United States: 1995 to 2010.” April 1996
http://www.census.gov/prod/1/pop/p25-1129.pdf
Fact 4: Average number of loads of laundry washed per year per household: 400 loads/year.
The article mentions the impact of children on the loads of laundry washed, so we assume the figure refers
to loads/year washed by households with children.
Source: California Energy Commission, “Consumer Energy Center: Appliances: Clothes Washers.”
http://www.consumerenergycenter.org/home/appliances/washers.html
Fact 5: Average cost of detergent per load of laundry: $0.23/ load
Source: Consumer Reports, “Laundry Detergent Test: High Price Doesn’t Guarantee High Performance.”
June 1, 2010.
http://pressroom.consumerreports.org/pressroom/2010/06/yonkers-ny-consumer-reports-latest-tests-of-morethan-50-laundry-detergents-continue-to-show-that-buying-a-high-priced-l.html
At this point, you have the data you need to estimate the market size using top-down techniques.
1. Estimate the size of the U.S. laundry detergent market using the Top-Down approach using the data given.
Approach
Top-Down Approach
Results
Bottom-Up Estimation Methods
Next, you estimate the market size using bottom-up techniques. You research the space and learn that
different types of households have different laundry-washing behaviors. Specifically, you learn that married
couples (especially those with children) wash many more loads of laundry than bachelors. You examine U.S.
Census data and learn that the government breaks down households into three segments: Married Couples,
Male Householder, and Female Householder. You obtain the data for each segment:
Fact 6: Breakdown of U.S. Households, according to 2010 U.S. Census Bureau data:
Married Couples: 58.4 million
Female Householder: 35.3 million
Male Householder: 23.8 million
Source: U.S. Census Bureau, “America’s Families and Living Arrangements: 2010.”
http://www.census.gov/population/www/socdemo/hh-fam/cps2010.html
Armed with this information, you set out to estimate the market size using bottom-up techniques. In general,
the bottom-up approach will sum up usage from each segment like this:
Total Usage
=
Usage from Married Couples Households (i.e. Segment 1)
+ Usage from Female Householder (i.e. Segment 2)
+ Usage from Male Householder (i.e. Segment 3)
© Stephan Sorger, 2013; www.StephanSorger.com
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Marketing Analytics: Case Studies
We can express this as follows:
Total Usage
= (Married HH * #Loads/yr) + (Female HH * #Loads/yr) + (Male HH * Loads/yr) * $cost/load
We assume that behavior for each segment will be different. We make the assumption that married
households (especially those with children) will wash more laundry than female households, who in turn will
wash more laundry than male households. We will need to quantify (or estimate) the difference in behavior
as we calculate the bottom-up value.
2. Estimate the size of the U.S. laundry detergent market using the Bottom-Up approach.
Approach
Bottom-Up Approach
Results
© Stephan Sorger, 2013; www.StephanSorger.com
3
Marketing Analytics: Case Studies
Aggregating the Data
You decide to combine the values you estimated. In this process, if you feel particularly strongly about the
accuracy of one of the methods, you can weight it higher or lower than the others. Alternatively, you can
perform a simple arithmetic average.
3. Submit a final estimate by triangulating the data from the different approaches.
Triangulation
PEST Market Trend Analysis
You complete your analysis by conducting a PEST market trend analysis to predict the future state of the
U.S. laundry detergent market, based on current market forces.
4. Conduct a PEST market trend analysis for the laundry detergent market in the United States
PEST Analysis
Political
Results
Economic
Social
Technological
© Stephan Sorger, 2013; www.StephanSorger.com
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